(Note: A shorter version of this commentary appeared
in
The Detroit News on Nov. 8, 2007.)

For the past year, the public was told that even with
nearly $1.4 billion in new state tax hikes, severe cuts would still be required
to "balance the budget." Surprise! The "deficit" turns out to have been a gap
between expected revenue and the level of desired additional spending.
The state will spend $900 million more this year than last, most of which is
from state taxes and fees. The following items from the just-passed budget
illustrate the overall pattern:

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Total prison spending will be $2.01 billion, compared to $1.94
billion enacted last year.

The Department of Labor and Economic Growth will spend $1.30
billion, compared to $1.23 billion enacted last year.

$1.89 billion will be spent on universities, compared to $1.79
billion enacted the previous year.

The Department of Community Health will spend $12.05 billion,
compared to $11.02 billion enacted last year.

The Department of Human Services (Welfare) will spend $4.59
billion, compared to $4.47 billion enacted last year, and the department will
gain 171 new employees.

There were a few cuts: Government arts grants will fall
by $2 million, four prison facilities will close and a juvenile justice facility
will downsize, to name a few. An attempt to contract out the state’s foster
child and adoption services to private social service agencies will be
implemented to some degree, but much less than was hoped for.

That half-a-loaf foster care reform is a good example of
how the political establishment’s priorities are misplaced. Despite bipartisan
recognition that money could be saved and better outcomes realized for children
from troubled backgrounds, what appeared to trump everything else was the
possibility that outsourcing could replace some 800 government workers. The same
calculus has stymied every recent effort at bringing about transformational
government restructuring, from prison privatization to devolving State Police
road patrols to less costly county sheriffs.

The debate over these reforms is not
ideological. Neither liberals nor conservatives benefit from paying
corrections officers wages that an American Federation of Teachers survey shows
are almost one-third above the national average for corrections employees. The
education of children is not
advanced by granting school employees benefits so extraordinary that even a
state panel chaired by former Govs. Jim Blanchard and William Milliken suggested
they be scaled back. The public is not served by a budget that includes $150
million for raises to state workers —members of a class that on average already
earns substantially more than Michigan residents in the private sector, even in
many apples-to-apples job comparisons.

And Michigan’s economy is in serious trouble. Between
2001 and 2006, the real per-capita personal income of residents fell by 0.9
percent; nationwide, it rose by 5.3 percent. The state’s inflation-adjusted
gross domestic product actually shrank last year, and our 7.7 percent
unemployment rate is the nation’s highest. Most sobering of all, there are
indications that Michigan’s population may be beginning to fall, as has been
happening in Detroit for several decades.

Michigan has become a poor state — and compared to the
rest of the country, it’s getting poorer.

One would expect state government’s top priority to be
finding ways to do more with less and make Michigan a place that encourages
entrepreneurs and investors, rather than drives them away. However, the
just-concluded budget saga demonstrates that the real priority is to preserve
the government status quo, quite literallyat all costs.

This raises a disturbing question: Who runs state
government? Most people would answer "the governor," or "the Legislature," but
lawmakers are beginning to look like the agents of a very different set of
bosses — the state’s public employee unions. Michigan residents may not be aware
of the powerful pressure these unions brought to bear in Lansing over the past
year; those of us in Lansing saw it regularly in loud demonstrations, e-mail
campaigns and uncompromising letters to legislators. When the governor announced
her budget back in February, public-sector union members in T-shirts were
already handing out fliers supporting tax increases as an alternative to budget
cuts.

There are now indications that lawmakers may postpone
some of the tax hikes passed a month ago. This is promising only if lawmakers
genuinely reduce spending to lighten the burden on the residents they serve —
not just obsess on the hardships that may be faced by public servants.

#####

Jack McHugh is senior legislative analyst for the Mackinac
Center for Public Policy, a research and educational institute headquartered in
Midland, Mich. Permission to reprint in whole or in part is hereby granted,
provided that the author and the Center are properly cited.